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Rouhani’s reelection offers economic prosperity for Iran - expert

President Hassan Rouhani will hopefully bring the issues of sustainable employment, the promotion of domestic production and absorbing foreign investment into focus in his second term as president, an Iranian professor of economics residing in Japan, told Trend.

Dr. Farhad Taghizadeh-Hesary, a senior assistant to Dean at Asian Development Bank Institute, believes that President Hassan Rouhani in his second term will focus on pouring foreign investment into areas of economy which are more capital oriented such as energy sector, petrochemical industry, infrastructure and so on.

Taghizadeh-Hesary, who also is an Assist. Professor of Economics at Tokyo’s Keio University, said that Doctor Hassan Rouhani today had a hug lead over his challengers in the Islamic Republic of Iran 12th round of presidential election which demonstrates the fact that Iranian voters are in favor of economic rationalism.

According to him, the high number of votes in favor of Rouhani from the economic prospective has significant points.

“First of all, it shows that Iranians are rational in their economic decisions and behaviors. During the presidential rally most of his rivals promised to increase the volume of cashed subsidies paid to people. However, the nation through their votes demonstrated that those promises were not only irrational and impossible to be fulfilled but even if those nominees were capable of realizing that promises, liquid subsidies would never create a high level of real welfare for the nation due to the inflationary reasons. Today we see that majority of Iranian voters said “No” to the money illusion plans proposed by some of Rouhani’s rivals, Taghizadeh-Hesary explained.

“Secondly, the high number of votes in favor of doctor Rouhani showed that the current government was successful in implementing its economic policies. As it is clear, Rouhani four years ago received a devastated economy with beyond 40 percent inflation. However, due to proper macroeconomic policies the current inflation rate is single-digit and less than seven percent per annum.”

“Under former President Mahmoud Ahmadinejad’s term Iran’s GDP growth rate became negative which currently due to better economic policies, and in the meantime, as a result of the implementation of the Joint Comprehensive Plan of Action (JCPOA aka nuclear deal) leading to a surge in Iran’s oil exports as well as the flow of foreign investment to the country, the economic growth rate became positive and the figure is currently at six percent,” he added.

Saying that the country’s international rank for business environment improved during Rouhani’s first term, Taghizadeh-Hesary added that Iranians took a rational decision by re-electing Rouhani.

According to the expert, Iranians realize that the country, in order to create new job opportunities and sustainable employment, needs more time.

"For this, the country needs to pave the ground and environment which means reducing inflation rate that has already been achieved," he said.

In the meantime, paving the ground means improving the business environment in the country, Taghizadeh-Hesary said.

“I believe that Rouhani’s administration is capable of hitting the goal,” he concluded.

According to the World Bank, the Iranian economy bounced back sharply in 2016 at an estimated 6.4 percent.

However, the unemployment rate returned to a three-year high of 12.7 percent (or 3.3 million unemployed) in the second quarter of 2016 despite the high growth rate in this period.